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| source: google |
As the word Dynamic suggests, dynamic
discounting is a spontaneous process through which the buyers have got the
power to pay their suppliers at a discounted rate which is not fixed. The rate
at which it changes is dependent upon the time of payment. If the payment is
made early the discount offered is also heavy. It is a simple online platform
upon which the suppliers can submit their invoices for early payment and the buyers can view and approve the invoices
eligible for early payment. It is a win-win situation for both the parties as
the buyer's balance sheet is not affected and the sellers need for working capital is fulfilled on time.
This ultimately helps in maintaining a smooth flow of business, as the seller
gets the cash flow required to fulfil the next order.
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| Priority Vendor |
Let's have a look at the whole process step
by step.
- The vendor or the supplier sends the
original invoice to the buyers.
- The buyer reviews the invoices and after
it has cleared the eligibility criteria and all the credit/debit memos eligible
for discount negotiation are cleared, it is uploaded electronically on the
platform.
- After the invoice is uploaded the
supplier can view the all the uploaded invoices on that platform. They can wait
until the original maturity date of the invoice to get the payments or they can
apply for an early payment request
and get their payment released at an earlier date by giving a discount on the
actual amount of the invoice.
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| Priority Vendor |
PriorityVendor has been working upon bringing together
various businesses and suppliers to connect them to this dynamic discounting platform. It is a simple process of smoothening
the business flow. It has had a successful run in the retail, food and
beverages, and electronic industry. This Vendor
Finance facility prevents the suppliers or the vendors from approaching
banks for loans at high interest rates in order to maintain their working
capital. This kind of supplier finance
also helps the buyer or the businesses as the money they are giving to the
supplier was originally earning the interest from the banks which is quite low
if we compare it to the discount that they are giving on the invoices to the
vendors.
